ServisFirst Bancshares, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LOANS

LOANS

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

LOANS

NOTE 5 LOANS

The following table details the Company’s loans at June 30, 2013 and December 31, 2012 :

	June 30,			December 31,
	2013			2012
	(Dollars In Thousands)

Commercial, financial and agricultural	$	1,150,977		$	1,030,990
Real estate - construction		162,076			158,361
Real estate - mortgage:
Owner-occupied commercial		623,146			568,041
1-4 family mortgage		252,357			235,909
Other mortgage		359,923			323,599

Subtotal: Real estate - mortgage		1,235,426			1,127,549
Consumer		41,713			46,282

Total Loans		2,590,192			2,363,182
Less: Allowance for loan losses		(28,757	)		(26,258	)

Net Loans	$	2,561,435		$	2,336,924

Commercial, financial and agricultural		44.43	%		43.63	%
Real estate - construction		6.26	%		6.70	%
Real estate - mortgage:
Owner-occupied commercial		24.06	%		24.04	%
1-4 family mortgage		9.74	%		9.98	%
Other mortgage		13.90	%		13.69	%
Subtotal: Real estate - mortgage		47.70	%		47.71	%
Consumer		1.61	%		1.96	%
Total Loans		100.00	%		100.00	%

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan loss portfolio segments and classes. These categories are utilized to develop the associated allowance for loan losses using historical losses adjusted for current economic conditions defined as follows:

⋅

Pass loans which are well protected by the current net worth and paying capacity of the obligor (or obligors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

⋅

Special Mention loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

⋅

Substandard loans that exhibit well-defined weakness or weaknesses that presently jeopardize debt repayment. These loans are characterized by the distinct possibility that the institution will sustain some loss if the weaknesses are not corrected.

⋅

Doubtful loans that have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

Loans by credit quality indicator as of June 30, 2013 and December 31, 2012 were as follows:

			Special
June 30, 2013	Pass		Mention		Substandard		Doubtful		Total
	(In Thousands)

Commercial, financial and agricultural	$	1,107,307	$	35,092	$	8,464	$	114	$	1,150,977
Real estate - construction		137,731		6,645		17,700		-		162,076
Real estate - mortgage:
Owner-occupied commercial		605,157		10,581		7,408		-		623,146
1-4 family mortgage		237,094		6,248		9,015		-		252,357
Other mortgage		347,364		7,670		4,889		-		359,923
Total real estate mortgage		1,189,615		24,499		21,312		-		1,235,426
Consumer		41,057		78		578		-		41,713
Total	$	2,475,710	$	66,314	$	48,054	$	114	$	2,590,192

			Special
December 31, 2012	Pass		Mention		Substandard		Doubtful		Total
	(In Thousands)

Commercial, financial and agricultural	$	1,004,043	$	19,172	$	7,775	$	-	$	1,030,990
Real estate - construction		121,168		22,771		14,422		-		158,361
Real estate - mortgage:
Owner-occupied commercial		555,536		4,142		8,363		-		568,041
1-4 family mortgage		223,152		6,379		6,378		-		235,909
Other mortgage		312,473		6,674		4,452		-		323,599
Total real estate mortgage		1,091,161		17,195		19,193		-		1,127,549
Consumer		46,076		71		135		-		46,282
Total	$	2,262,448	$	59,209	$	41,525	$	-	$	2,363,182

Loans by performance status as of June 30, 2013 and December 31, 2012 were as follows:

June 30, 2013	Performing		Nonperforming		Total
	(In Thousands)

Commercial, financial and agricultural	$	1,149,580	$	1,397	$	1,150,977
Real estate - construction		149,853		12,223		162,076
Real estate - mortgage:
Owner-occupied commercial		622,391		755		623,146
1-4 family mortgage		252,060		297		252,357
Other mortgage		359,686		237		359,923
Total real estate mortgage		1,234,137		1,289		1,235,426
Consumer		41,598		115		41,713
Total	$	2,575,168	$	15,024	$	2,590,192

December 31, 2012	Performing		Nonperforming		Total
	(In Thousands)

Commercial, financial and agricultural	$	1,030,714	$	276	$	1,030,990
Real estate - construction		151,901		6,460		158,361
Real estate - mortgage:
Owner-occupied commercial		565,255		2,786		568,041
1-4 family mortgage		235,456		453		235,909
Other mortgage		323,359		240		323,599
Total real estate mortgage		1,124,070		3,479		1,127,549
Consumer		46,139		143		46,282
Total	$	2,352,824	$	10,358	$	2,363,182

Loans by past due status as of June 30, 2013 and December 31, 2012 were as follows:

June 30, 2013	Past Due Status (Accruing Loans)
							Total Past
	30-59 Days		60-89 Days		90+ Days		Due		Non-Accrual		Current		Total Loans
	(In Thousands)
Commercial, financial and agricultural	$	1,000	$	675	$	65	$	1,740	$	1,332	$	1,147,905	$	1,150,977
Real estate - construction		-		-		-		-		12,223		149,853		162,076
Real estate - mortgage:
Owner-occupied commercial		904		165		-		1,069		755		621,322		623,146
1-4 family mortgage		651		-		79		730		218		251,409		252,357
Other mortgage		3,609		375		-		3,984		237		355,702		359,923
Total real estate - mortgage		5,164		540		79		5,783		1,210		1,228,433		1,235,426
Consumer		82		47		115		244		-		41,469		41,713
Total	$	6,246	$	1,262	$	259	$	7,767	$	14,765	$	2,567,660	$	2,590,192

December 31, 2012	Past Due Status (Accruing Loans)
							Total Past
	30-59 Days		60-89 Days		90+ Days		Due		Non-Accrual		Current		Total Loans
	(In Thousands)
Commercial, financial and agricultural	$	1,699	$	385	$	-	$	2,084	$	276	$	1,028,630	$	1,030,990
Real estate - construction		-		-		-		-		6,460		151,901		158,361
Real estate - mortgage:
Owner-occupied commercial		1,480		10		-		1,490		2,786		563,765		568,041
1-4 family mortgage		420		16		-		436		453		235,020		235,909
Other mortgage		516		-		-		516		240		322,843		323,599
Total real estate - mortgage		2,416		26		-		2,442		3,479		1,121,628		1,127,549
Consumer		108		-		8		116		135		46,031		46,282
Total	$	4,223	$	411	$	8	$	4,642	$	10,350	$	2,348,190	$	2,363,182

The Company assesses the adequacy of its allowance for loan losses prior to the end of each calendar quarter. The level of the allowance is based on management’s evaluation of the loan portfolios, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. This evaluation is inherently subjective as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans, which may be susceptible to significant change. Loan losses are charged off when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a “confirming event” has occurred which serves to validate that full repayment pursuant to the terms of the loan is unlikely. Allocation of the allowance is made for specific loans, but the entire allowance is available for any loan that in management’s judgment deteriorates and is uncollectible. The portion of the reserve attributable to qualitative factors is management’s evaluation of potential future losses that would arise in the loan portfolio should management’s assumption about qualitative and environmental conditions materialize. This qualitative factor portion of the allowance for loan losses is based on management’s judgment regarding various external and internal factors including macroeconomic trends, management’s assessment of the Company’s loan growth prospects, and evaluations of internal risk controls.

The following table presents an analysis of the allowance for loan losses by portfolio segment as of June 30, 2013 and December 31, 2012. The total allowance for loan losses is disaggregated into those amounts associated with loans individually evaluated and those associated with loans collectively evaluated.

	Commercial,
	financial and			Real estate -			Real estate -						Qualitative
	agricultural			construction			mortgage			Consumer			Factors			Total
	(In Thousands)
	Three Months Ended June 30, 2013
Allowance for loan losses:
Balance at March 31, 2013	$	8,951		$	6,642		$	5,737		$	164		$	6,185		$	27,679
Chargeoffs		(101	)		(1,888	)		(270	)		(129	)		-			(2,388	)
Recoveries		31			95			3			3			-			132
Provision		2,259			604			569			186			(284	)		3,334
Balance at June 30, 2013	$	11,140		$	5,453		$	6,039		$	224		$	5,901		$	28,757

	Three Months Ended June 30, 2012
Allowance for loan losses:
Balance at March 31, 2012	$	6,625		$	7,607		$	3,893		$	510		$	5,027		$	23,662
Chargeoffs		(261	)		(2,502	)		(221	)		(537	)		-			(3,521	)
Recoveries		-			8			4			3			-			15
Provision		147			2,469			(36	)		309			194			3,083
Balance at June 30, 2012	$	6,511		$	7,582		$	3,640		$	285		$	5,221		$	23,239

	Six Months Ended June 30, 2013
Allowance for loan losses:
Balance at December 31, 2012	$	8,233		$	6,511		$	4,912		$	199		$	6,403		$	26,258
Chargeoffs		(988	)		(3,877	)		(270	)		(131	)		-			(5,266	)
Recoveries		37			102			3			5			-			147
Provision		3,858			2,717			1,394			151			(502	)		7,618
Balance at June 30, 2013	$	11,140		$	5,453		$	6,039		$	224		$	5,901		$	28,757

	Six Months Ended June 30, 2012
Allowance for loan losses:
Balance at December 31, 2011	$	6,627		$	6,542		$	3,295		$	531		$	5,035		$	22,030
Chargeoffs		(548	)		(2,919	)		(281	)		(629	)		-			(4,377	)
Recoveries		100			8			6			6			-			120
Provision		332			3,951			620			377			186			5,466
Balance at June 30, 2012	$	6,511		$	7,582		$	3,640		$	285		$	5,221		$	23,239

	As of June 30, 2013
Allowance for loan losses:
Individually Evaluated for Impairment		2,286			932			2,744			75			-			6,037
Collectively Evaluated for Impairment		8,854			4,521			3,295			149			5,901			22,720

Loans:
Ending Balance	$	1,150,977		$	162,076		$	1,235,426		$	41,713		$	-		$	2,590,192
Individually Evaluated for Impairment		6,771			17,700			21,256			559			-			46,286
Collectively Evaluated for Impairment		1,144,206			144,376			1,214,170			41,154			-			2,543,906

	As of December 31, 2012
Allowance for loan losses:
Individually Evaluated for Impairment		577			1,013			1,921			-			-			3,511
Collectively Evaluated for Impairment		7,656			5,498			2,991			199			6,403			22,747

Loans:
Ending Balance	$	1,030,990		$	158,361		$	1,127,549		$	46,282		$	-		$	2,363,182
Individually Evaluated for Impairment		3,910			14,422			18,927			135			-			37,394
Collectively Evaluated for Impairment		1,027,080			143,939			1,108,622			46,147			-			2,325,788

The following table presents details of the Company’s impaired loans as of June 30, 2013 and December 31, 2012, respectively. Loans which have been fully charged off do not appear in the tables.

							For the three months				For the six months
							ended June 30,				ended June 30,
	June 30, 2013						2013				2013
									Interest				Interest
			Unpaid				Average		Income		Average		Income
	Recorded		Principal		Related		Recorded		Recognized		Recorded		Recognized
	Investment		Balance		Allowance		Investment		in Period		Investment		in Period
	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	2,805	$	2,805	$	-	$	2,732	$	82	$	2,708	$	172
Real estate - construction		9,933		10,976		-		9,587		39		9,166		90
Real estate - mortgage:
Owner-occupied commercial		2,988		2,988		-		3,000		36		3,013		77
1-4 family mortgage		1,351		1,351		-		1,352		15		1,353		30
Other mortgage		3,010		3,108		-		2,901		43		2,812		82
Total real estate - mortgage		7,349		7,447		-		7,253		94		7,178		189
Consumer		19		19		-		20		-		22		1
Total with no allowance recorded		20,106		21,247		-		19,592		215		19,074		452

With an allowance recorded:
Commercial, financial and agricultural		3,966		3,966		2,286		3,526		41		3,626		81
Real estate - construction		7,767		8,214		932		7,947		40		8,034		91
Real estate - mortgage:
Owner-occupied commercial		4,364		4,614		1,184		4,383		35		4,398		66
1-4 family mortgage		7,664		7,664		1,136		7,825		67		7,675		130
Other mortgage		1,879		1,879		424		1,883		27		1,821		54
Total real estate - mortgage		13,907		14,157		2,744		14,091		129		13,894		250
Consumer		540		540		75		588		9		705		21
Total with allowance recorded		26,180		26,877		6,037		26,152		219		26,259		443

Total Impaired Loans:
Commercial, financial and agricultural		6,771		6,771		2,286		6,258		123		6,334		253
Real estate - construction		17,700		19,190		932		17,534		79		17,200		181
Real estate - mortgage:
Owner-occupied commercial		7,352		7,602		1,184		7,383		71		7,411		143
1-4 family mortgage		9,015		9,015		1,136		9,177		82		9,028		160
Other mortgage		4,889		4,987		424		4,784		70		4,633		136
Total real estate - mortgage		21,256		21,604		2,744		21,344		223		21,072		439
Consumer		559		559		75		608		9		727		22
Total impaired loans	$	46,286	$	48,124	$	6,037	$	45,744	$	434	$	45,333	$	895

December 31, 2012

			Unpaid				Average		Interest Income
	Recorded		Principal		Related		Recorded		Recognized in
	Investment		Balance		Allowance		Investment		Period
	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	2,602	$	2,856	$	-	$	2,313	$	105
Real estate - construction		6,872		7,894		-		7,631		188
Owner-occupied commercial		5,111		5,361		-		5,411		145
1-4 family mortgage		2,166		2,388		-		2,177		108
Other mortgage		4,151		4,249		-		4,206		275
Total real estate - mortgage		11,428		11,998		-		11,794		528
Consumer		135		344		-		296		6
Total with no allowance recorded		21,037		23,092		-		22,034		827

With an allowance recorded:
Commercial, financial and agricultural		1,308		1,308		577		1,325		90
Real estate - construction		7,550		8,137		1,013		6,961		154
Real estate - mortgage:
Owner-occupied commercial		3,195		3,195		779		3,277		77
1-4 family mortgage		4,002		4,002		1,007		4,001		139
Other mortgage		302		302		135		307		20
Total real estate - mortgage		7,499		7,499		1,921		7,585		236
Total with allowance recorded		16,357		16,944		3,511		15,871		480

Total Impaired Loans:
Commercial, financial and agricultural		3,910		4,164		577		3,638		195
Real estate - construction		14,422		16,031		1,013		14,592		342
Real estate - mortgage:
Owner-occupied commercial		8,306		8,556		779		8,688		222
1-4 family mortgage		6,168		6,390		1,007		6,178		247
Other mortgage		4,453		4,551		135		4,513		295
Total real estate - mortgage		18,927		19,497		1,921		19,379		764
Consumer		135		344		-		296		6
Total impaired loans	$	37,394	$	40,036	$	3,511	$	37,905	$	1,307

Troubled Debt Restructurings (“TDR”) at June 30, 2013, December 31, 2012 and June 30, 2012 totaled $9.4 million, $12.3 million and $8.4 million, respectively. At June 30, 2013, the Company had a related allowance for loan losses of $1,387,000 allocated to these TDRs, compared to $1,442,000 at December 31, 2012 and $433,000 at June 30, 2012. Three TDR loans to one borrower in the amount of $2.8 million were paid-in-full and twenty TDR loans to another borrower were consolidated into one loan during the second quarter 2013. All loans classified as TDRs as of June 30, 2013 are performing as agreed under the terms of their restructured plans. The following table presents an analysis of TDRs as of June 30, 2013 and June 30, 2012.

	June 30, 2013						June 30, 2012
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Contracts		Investment		Investment		Contracts		Investment		Investment
	(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural		2	$	1,066	$	1,066		2	$	1,263	$	1,263
Real estate - construction		-		-		-		15		2,377		2,377
Real estate - mortgage:
Owner-occupied commercial		3		3,121		3,121		3		2,786		2,786
1-4 family mortgage		1		4,925		4,925		5		1,709		1,709
Other mortgage		1		294		294		1		304		304
Total real estate mortgage		5		8,340		8,340		9		4,799		4,799
Consumer		-		-		-		-		-		-
		7	$	9,406	$	9,406		26	$	8,439	$	8,439

	Number of		Recorded		Number of		Recorded
	Contracts		Investment		Contracts		Investment

Troubled Debt Restructurings That Subsequently Defaulted
Commercial, financial and agricultural		-	$	-		-	$	-
Real estate - construction		-		-		-		-
Real estate - mortgage:
Owner-occupied commercial		-		-		3		2,786
1-4 family mortgage		-		-		-		-
Other mortgage		-		-		-		-
Total real estate - mortgage		-		-		3		2,786
Consumer		-		-		-		-
		-	$	-		3	$	2,786

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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